If you answered inventory, you are in the minority of people who aced both questions. In a well-managed practice, inventory might make up about 20 percent of revenue.

So, whether you use low-tech or high-tech techniques, it is critical to your bottom line to closely manage your inventory. Here are 10 common inventory myths and mistakes. Make sure you’re not their victim.

Myth 1: I Already Have Reporting Tools That Track Everything

Many colleagues believe they have all the resources needed to track their inventory properly and to maintain a successful practice. However, that often is not the case because their current systems are limited to certain actions.

Having the proper inventory tracking system is critical. It will track inventory and provide reports on future orders and rules to abide by. This will ensure that the practice will be more efficient as it improves smart and accurate decision making.

Patient management software digitally tracks patient information. These systems perform multiple actions, such as tracking medical records. They may suggest when a patient needs a refill and will provide a digital timeline for each patient, preventing miscommunication. They also increase profitability, drive efficiency and prevent mismanagement of supplies and narcotics.

Once they trust the software, veterinarians are free to focus on their relationship with clients and patients.

The next step up is a sophisticated cabinet such as Cubex, which relies on cloud-based technology to manage medical supplies and narcotics. Besides improved inventory tracking, the promise is decreased theft and less overstocking or understocking of supplies while increasing the practice’s overall profitability.

Myth 2: I Know What I Have on the Shelf

Many veterinarians and inventory managers think they know where to find every single item in their practice. However, that is often not the case because products get misplaced, miscounted and overstocked.

Cloud-based technology, through an electronic device, tracks every item the practice owns. Cubex reportedly cuts the time in half for staff members in charge of tracking inventory.

Myth 3: Overstocking Is Not That Big of a Deal

Overstocking is a huge problem that veterinarians and inventory managers struggle with. Having more inventory than needed costs the practice money, not only to buy the products but also to manage them, which increases labor. (See the aforementioned No. 1 expense.)

Being proactive with stocking inventory is to not overstock and to have an inventory management system that accurately tracks inventory in real time.

Myth 4: Tracking Inventory Manually Is the Most Accurate Solution

Many people believe that hand counts are more accurate, but that is not always the case.

Human error is the No. 1 cause of poor inventory tracking. Implementing a cloud-based system will prevent this from happening. In addition, it will ensure cost savings with inventory and labor costs, and increase the practice’s overall revenue.

Myth 5: I Know How Much of Each Product We Need

It is very difficult, if not impossible, to remember a hospital’s needs for every medication, every type of pet food and every other product. A wiser strategy is to set minimum and maximum thresholds for every item. These numbers are identified over time through experience and can be modified, such as during a particular product’s high season.

Mistake 1: I Let My Doctors Order What They Need to Practice

Bosses and inventory managers often allow doctors to order every medication they want. They believe the policy ensures creativity, peace in the practice and freedom from the prescription pad.

In reality, the end result are duplicates, which can lead to expired drugs. It is not unusual to see practices with five different NSAIDs, flea medications or ophthalmic antibiotic ointments. This is hard to justify, both from a business and a medical standpoint.

Meet with your doctors quarterly to decide which drugs are mandatory and which can be eliminated. Keeping duplicates to a minimum will greatly simplify your inventory and will improve your profits.

Mistake 2: If an Item Doesn’t Sell, It Will Be Wasted

The least you should do is call the manufacturer or your supplier to ask if your overstock may be returned. Manufacturers typically accept returns months before and, amazingly, several months after the expiration date.

Try to return expired fish at your favorite grocery store and tell me how that goes. Most of our beloved manufacturers provide an incredible benefit you should take advantage of. They occasionally may charge a restocking fee, but it is still the best bargain in town.

Mistake 3: Not Having Someone in Charge

Cross training is a wonderful concept, but not in the inventory world. It is wiser to have one key person in charge of inventory—someone who will become your specialist. Just a few of the benefits include:

Fewer double orders

Personal relationships with reps

Anticipation of seasonal needs

Tighter inventory control

Negotiation of lower prices

Real-time price adjustments

Healthy obsession with expiration dates.

In turn, your inventory specialist can train someone to take over when they are off.

Mistake 4: Being Reactive Rather Than Proactive

Increased need for some products often can be anticipated. An important condition is to keep your inventory person in the loop.

If you decide to have a weight-loss month, remember to order more weight-loss food. If you are going to have a dental month, you will need more toothbrushes and toothpaste. Having them on hand will increase compliance.

Mistake 5: Being Penny-Wise and Pound-Foolish

It is not unusual to see inventory people and practice owners spend a lot of time comparing suppliers in an attempt to save a few pennies on a product. In the end, this strategy costs a lot in labor, not only to do the research but later to open multiple boxes from several suppliers, dispose of said boxes, deal with multiple statements so prices can be adjusted, and then to pay multiple invoices.

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